The Relationship between Energy Consumption and GDP: Evidence from a Panel of 10 Latin American Countries

We estimate the elasticity of the long-run relationship between energy consumption and GDP for 10 countries in Latin America from 1971 to 2007. We employ Pedroni’s (1999, 2004) panel cointegration test to determine if such a long-run relationship exists. Westerlund’s (2006) cointegration test for panel data is used to estimate the slopes of the long-run relationship variables. These findings provide empirical guidance for policies to promote energy conservation and ef ficiency. Cointegration between the two variables is found to exist in both directions. This paper discusses the energy dependence of some countries and describes potential implementation of energy conservation policies in others.